There's no crisis in SA, says Gordhan
Jobs in government will not be so easy to come by in the next few years.
In a veiled swipe at trade unions, Finance Minister Pravin Gordhan said specific targets would have to be set for personnel numbers.
In a sombre medium-term budget policy statement delivered to parliament yesterday, he emphasised that "there will be no additions to the overall spending level".
Gordhan had to allay fears that South Africa was on a path of "fiscal drift" after downgrades by ratings agencies Moody's and Standard & Poor's in recent weeks. The downgrades could make South Africa's government debt more costly.
By next year, about 10% of the budget will be going towards paying the interest on debt.
Gordhan called the downgrades "inappropriate", but said they were "a cause for urgent reflection".
He hit out at international observers' concerns about uncertainty on the eve of the ANC's elective conference in Mangaung , saying most of their observations were out of line.
"I think there are too many people who are outside of this country who are making judgment calls on this country who don't understand our history well enough, who don't understand where we come from as a country and as a political culture and who make negative pronouncements that are out of line.
"There's no catastrophe that's gonna hit our country at this point in time," Gordhan said.
The largest share of spending goes towards paying government employees and this has grown faster than other categories over the past four years, according to Gordhan.
A painful wage dispute between public-sector trade unions and the Department of Public Service and Administration dragged on for months and ended in an unpleasant multi-year increase surprise for the Treasury.
The National Education, Health and Allied Workers' Union accused the government of negotiating in bad faith.
Wage increases of 7% this year have forced the Treasury to adjust forecasts in its February budget. It had to scrape together an extra R1.5-billion for national government employees and another R4-billion for those in the provinces. Although it might not sound like a lot compared to a R336-billion wage bill, it does escalate.
According to the mini-budget, the deal is expected to cost an additional R37.5-billion over the next three years.
"Over the period ahead, government will take a more deliberate approach to managing overall employment and wage trends across the public sector, including state-owned entities. In particular, government will curtail unwarranted growth in personnel numbers," read the policy statement.
It is clear Gordhan wants to send out the message that he is serious about containing costs. He said that over the next three years as much as R40-billion has been "reprioritised". He also talked about shifting expenditure towards "social and development objectives". Some will go to infrastructure.
A large chunk will be swallowed up by a growing proportion of the population dependent on state support. This form of spending will reach R136-billion next year and the number of people receiving grants is expected to reach 17million by 2015, according to Gordhan.
The Treasury now expects economic growth of 2.5% this year, down from 3.1% earlier. Gordhan attributes this to "both global uncertainty and disruptions to domestic production". But some economists fear that the paralysis in large parts of the mining sector, coupled, with the recent transport workers strike and a slowdown in the manufacturing sector, will suppress growth further.
Tax revenue is already expected to be R5-billion less than the estimate in February.
According to Gordhan, government's response to the 2009 recession has led to a dramatic widening of the deficit. By the time debt stabilises in 2015/16, more than R1-trillion will have been added to the government debt, according to the budget.
He said the government debt will peak at 39% of the country's gross domestic product in 2015. This compares favourably to most developed countries, but it has grown faster than the debt of most emerging markets in recent years.
BUDGET HIGHLIGHTS
FINANCE Minister Pravin Gordhan released his m edium-t erm b udget p olicy statement yesterday. Some of the new elements are:
DEFICIT
BUDGET deficit is projected at 4.8% of GDP for the fiscal year to March 2013. The deficit is projected to fall to 3.1% by 2015/16.
GROWTH
GROWTH forecast is trimmed slightly to 2.5% for 2012, from 2.7% in February. GDP is projected to grow to 3% in 2013 before reaching 4.1% in 2015.
INFLATION
INFLATION to average 5.7% in 2012, within the 3% to 6% target range, and to remain target-bound over the next three years. Inflation expected to decline from 5.5% in 2013, before touching 4.9% in 2015.
REVENUE
TOTAL government revenue for 2012/13 is estimated at R900-billion, or 27.5% of GDP.
SPENDING
TOTAL government expenditure in 2012/13 set at R1.1-trillion, or 32.5% of GDP. Spending seen at R1.1-trillion and R1.2-trillion over the following two years.
INFRASTRUCTURE
PLANS to spend R845-billion on infrastructure over three years reiterated.
DEBT
TOTAL net government debt to hit R1.16-trillion, or 32.8% of GDP, by end of 2012/13, rising to R1.71-trillion by 2015/16, or 39.2% of GDP.
BORROWING REQUIREMENT
NET borrowing forecast at R165-billion for 2012/13, rising to R173-billion the following year, before easing to R162-billion in 2014/15.
CURRENT ACCOUNT
CURRENT account deficit expected to widen to 5.9% of GDP in 2012, from 3.3% last year, as the trade balance deteriorates as a result of the euro crisis. - Reuters
Bouquests for 'bravwe minister'
POLITICAL parties have welcomed Finance Minister Pravin Gordhan's commitment to stamp out corruption and wasteful and irregular expenditure, but have questioned whether cabinet ministers will toe the line.
DA MP Tim Harris said he doubted Gordhan's ability to hold departments to account for wasteful and fruitless expenditure that had spiked into the billions.
"On the one hand, we welcome the commitment to fiscal consolidation; on the other, we are very alarmed by the Treasury's influence in the economic cluster of cabinet," he said.
COPE MP Nick Koornhof said Gordhan needed departments to heed the call to curb spending.
"The finance minister was brave today; it was time to hit the brakes. Now, we hope to see that the departments and the provinces and his cabinet colleagues and the president come out with guns blazing to support him. If they don't do that, he will fail," he said.
ACDP MP Steve Swart applauded Gordhan's strong message on corruption.
Both Harris and Swart said the decision to freeze expenditure was a wise move.
However, Harris said he was concerned policies to improve and sustain the economy might just be grand posturing.
Nedbank senior economist Nicky Weimar said: "The economic growth forecast might be slightly tilted to the optimistic side, but it is broadly realistic. They acknowledge the areas where we know there are weaknesses and that are generally holding the economy back, which are mainly your export side of the economy and your production side of the economy. In other words, these are your mining and manufacturing sectors.
"Even before all these setbacks, we were already running a current account deficit of over 6% of GDP, which is simply not sustainable."
- Denise Williams, Reuters
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If you have an opinion you would like to share on this article, please send us an e-mail to the Times LIVE iLIVE team. In the mean time, click here to view the Times LIVE iLIVE section.SuiGeneris
Posted 236 days agoWhy is everyone in government in denial of the truth in SA ?
Mushroom-Threads
wilhelm.snyman
muk2
Posted 236 days agom1si2zi3nzo4
At some stage South African public must recall that politics is a dirty game, and learn not to take politics so seriously, but look at the facts and data. A politician cannot be expected to see any crisis, until catastrophe hits him on the face. A politician gains control of the public purse by blatantly lying. He promises heaven and earth without even knowing how he will fulfill such promise. When he gets to office, there is no way of realising any crisis, because "the cold out there" cannot penetrate the fat he develops. Reality is only acknowledged during occasional visits to see how emaciated is the sheep he has been fleecing, and how much remains. Then he can buy public sympathy by public statements that he "spends sleepless nights", otherwise "things are not so bad". Why would they be?
SuiGeneris
This statement is so typical about the current situation in government where these people would allow situations to spiral out of control and try to fix it under tremendous pressure with crisis control.
Any competent person, with his/her ear on the ground, would have been able to foresee that things are not going exactly according to plan and immediately implement counter measures to get it back on tract.
Your statement precisely fits the profile of an incompetent person being employed in a position where he/she is unfit to perform to the required standard.
RSA.MommaCyndi
Posted 236 days agoMike123
Posted 236 days agoSuiGeneris
RSA.MommaCyndi
i_stub_born
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m1si2zi3nzo4
Posted 236 days agoAt a global level, which we form the tiniest limb- pay attention Gordhan, Ramaphosa, and Manuel - we have a crisis of the nation state, which undermines any institutional capacity to correct social imbalances derived from the market logic. Bureaucracy, hierarchy, command-and-control systems, specialisation, have been stretched too far, for too long, well beyond the limits of implosion, by the information age. Thus, the role of the state, as a 'wealth distributor' has been rendered completely redundant. Physical work, including infrastructure development, for job creation, is a non-starter, as its costs are highly inflated, as a result of technological advancement. Self-programmable labour - essential for production - is the product of education, an embodiment of knowledge and information, and requires the least intervention by bureaucracy. Even if it could, it would be found wanting, due to increased mobility of information and people. This mobility has been crippled by our redundant BEE, to a point where we are lagging behind some African states.
At a local level, this elite regime has been sucked up in an economy with high levels of capital and oligopolistic control. The Marikana massacre is a further development from the toyi-toyi, as a result of the circulation of capital among the few established capitalists and parasitic BEE's, who have joined the band-wagon. The source of productivity is innovation, in a knowledge and information phase, education, a key quality, and not skills. With SA'n education at such a poor level, and devoid of the essential and fast reprogrammability, the existing physical production will continue to be costly, and uncompetitive, for centuries.
So, the inequality, which philosophers referred to as the prime source of evil, will remain with us for centuries. As the saying goes; from inequality comes wealth, and wealth and poverty are related. The dream of 'equality' enshrined in the constitution, will remain just that - a dream, or fantasy. From wealth follows luxury and idleness, as they say. The luxury the Gordhans see, and enjoy, cannot be sustained, as it is produced at a high cost, in a mal-functioning economy, not supported by relevant education.
In passing, this quote from Adam Ferguson, is apt; "animals, less honoured than we, have sagacity enough to procure their food, and to find the means of their solitary pleasures" Human beings were stripped of this sagacity by capitalism and the nation state. In our country it was augmented by apartheid, and is now perpetrated by the current elite.
UDFSupporter
Posted 236 days agoGedleyihlekiza
This parasites when holding meetings must buy their own food from their pockets, they already earn too much enough to can afford that! Unless if they do not value the poor masses or take them for granted, if so, the same notion must apply to their votes as it applies to economic gains for themselves. If you do not love me than you must hate my vote as well, is all or nothing.